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Creditors and Bankruptcy/Should I file for bankruptcy or try to settle?
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Question
I currently owe probably 6-7k in credit card debt. Plus I still owe 13k on my car. After only working 16 hours a week I stopped paying my credit cards. Before that I did pay off a few. Currently I am ok on my car but I have no way to pay my credit cards off. I want to start school soon and will not have money to pay my credit off for a few years but they were calling me a lot and have almost stopped calling all together. I'm worried they could sue me and garnish my wages. Since I only owe 6-7k is filing bankruptcy a good option for me? My credit score is already before 400 so it's already terrible.
Hi Charissa:
Filing bankruptcy is a deeply personal decision, so I hesitate to advise one way or another. In general, I am NOT a fan of BK. Additionally, you have little debt compared to most. I know it seems insurmountable, but 6-7k is really not that much in the scheme of life. Bankruptcy is a 10-year dagger to your credit and also may prohibit you from certain jobs and promotions. In general, I believe it better to try and deal with each debt as it arises. Stall and fight off judgements, protect your assets, settle the amounts for much less than the balances, and complete credit repair as you go. You can have clean credit in as little as 18 months if everything falls into place, more likely 3-5 years, but certainly much less than the 10 years bankruptcy takes. Additionally, you may pay anywhere from $800-$3000 in court and attorney fees. That is a large percentage of your debt.
On the other hand, bankruptcy can give you a clean start if you qualify. It really is a personal decision. Remember you can file bankruptcy at any point including unsecured judgements in many cases, so it can always be an option down the line.
Good luck in whichever decision you make. One other point, you can legally stop the calls from third party collectors simply by sending them a letter. The calls should cease once the cards are charged off and given to debt collectors.
Regan
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Answers by Expert:
Regan Shinski
Expertise
I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit reporting.
Experience
Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports.
Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry.
I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA).
I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage.
In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.
Education/Credentials
BA - University of Minnesota
Past/Present Clients
(private)
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